The Sisyphean Company is considering a new project that will have an annual depreciation expense of $2.5 million. If Sisyphean's marginal corporate tax rate is 40% and their average corporate tax rate is 30%, then what is the value of the depreciation tax shield on their new project?
A) $750,000
B) $1,000,000
C) $1,500,000
D) $1,750,000
B
Explanation: B) Here we need to use the marginal tax rate.
So depreciation tax shield = $2,500,000 × .40 = $1 million
Business
You might also like to view...
What is the overall goal of conflict management?
A) achieving the desired conflict level B) resolving conflict C) stimulating conflict D) identifying conflict E) assessing the source of conflict
Business
Joe's company has set up a new branch in a small town in Spain. He is working ontranslating Microsoft Outlook into Spanish to help the new recruits from the town learn how touse the program. Joe is involved in the process of ________
A) differentiating B) stringing C) localizing D) optimizing
Business